Intel drops on 2014 sales forecast that’s short of estimates

Intel Corp. said revenue next year will be little changed from 2013 levels, short of analysts’ estimates, triggering the steepest drop in shares in 10 months.

Intel fell 5.2% to $23.93 at 1:39 p.m. in New York, the biggest intraday decline since Jan. 18. The stock had climbed 22% this year through yesterday. The company said sales would be approximately the same from $52.6 billion in 2013, below the $53.7 billion analysts were projecting, according to the average of estimates compiled by Bloomberg.

The world’s largest maker of semiconductors said at an investor meeting yesterday that it will expand access to its factories for other chipmakers, taking advantage of advanced production capabilities and seeking to boost revenue sources amid greater competition. Intel will focus more on providing what customers want, rather than trying to push its own designs, Chief Executive Officer Brian Krzanich said at the meeting.

“You have a company that has all the right tools for success, and you ask why aren’t they able to convert that into revenue and earnings growth?” said Doug Freedman, an analyst at RBC Capital Markets in San Francisco, who rates the stock the equivalent of a buy.

Intel, which has traditionally only made its own chips, is expanding its foundry business, or manufacturing chips to order for other companies.

“We’d become insular,” Krzanich said. “We’d become focused on what was our best product rather than where the market was moving.”

Tough Business

Krzanich, 53, who became the company’s sixth CEO in May when he succeeded Paul Otellini, is a former factory manager who ran part of a network of plants that Intel says are the most advanced in the semiconductor industry.

Otellini had said Intel’s plants were closed to competitors. Earlier this year, Krzanich said he would consider changing that stance, and yesterday he confirmed the company’s willingness to make chips for companies that are beating Intel in mobile phones.

“We’re needing some kind of signal or sign that mobile is happening and they’re getting some kind of presence there,” said Betsy Van Hees, an analyst at Wedbush Securities in San Francisco. She has the equivalent of a hold rating on the stock. “The mobile business is an ugly business. It’s very tough.”